Small businesses play a vital role in reducing poverty and promoting economic development in developing communities by providing employment opportunities for low-income individuals, enabling them to improve their standard of living and rely on sustainable sources of income. These businesses serve as a cornerstone for economic growth, fostering innovation, utilizing local skills, and transforming them into productive economic opportunities. The ability of small businesses to reduce poverty depends on various factors, including access to affordable financing, appropriate training, and government policies that support growth and sustainability. When individuals successfully establish small businesses, they create new job opportunities not only for themselves but also for others in the community, thereby strengthening the local economic cycle. Small businesses also help reduce unemployment rates, particularly among youth and women, by offering flexible work environments that suit the social and economic conditions of developing communities. Empowering entrepreneurs through accessible loans and government incentives stimulates innovation and encourages investment in diverse sectors such as agriculture, industry, technology, and services. Additionally, these businesses promote economic independence and reduce reliance on government or foreign aid, leading to more sustainable economic development. Despite their numerous benefits, small businesses face challenges such as limited access to funding, marketing difficulties, intense competition from larger corporations, and regulatory obstacles that may hinder their growth. To address these challenges, it is essential to develop a supportive environment by providing entrepreneurs with necessary training, facilitating market access, and fostering a culture of entrepreneurship in developing communities. Non-governmental organizations and financial institutions also play a crucial role in supporting small businesses by offering financial and technical assistance that enhances their success and sustainability. Ultimately, small businesses remain one of the most effective solutions for combating poverty and driving economic development, particularly when provided with a conducive environment for growth. This allows individuals to build a more stable economic future and create a lasting positive impact on their communities.<br />Al-Mustaqbal University is the first University in Iraq.